A resale valuation gap is a verdict on the original sale.

A bank valuation at resale measures a house against recent comparable sales, so when it comes in well below what the owners paid, it is usually measuring the first purchase rather than the house. Houses bought in a bidding contest carry something extra in the price, the urgency of the moment and the fear of losing out. The valuer sent out for the next buyer's bank has none of that. He looks at what similar homes on the same street have registered for and asks what this one fetches when nobody is competing. If his figure is lower, the bond is approved for less than the purchase price, and the buyer has to find the difference in cash or step away.

None of this says the house got worse. The roof and the rooms are what they were. What the gap measures is the part of the original price that was never attached to the property at all, and the bank simply declines to lend against it. The owners can still sell if their buyer covers the shortfall. But the figure on the valuation report is really about an offer signed years earlier, and it may be the first cool look anyone took at it.